Stocks were stuck in neutral as investors worried over weakness in the jobs market and retail and government efforts to punish bailed-out bankers.
Mildly optimistic hesitation has been the hallmark of trading so far in 2010, with the averages creeping higher and only one negative day so far on the Standard & Poor's 500. Thursday's trading followed the same theme, with averages seesawing as investors await more direction from the upcoming wave of corporate earnings reports.
"We are working our way higher, but the daily moves are not very big. Volume has been light," said Ryan Detrick, analyst at Schaeffer's Investment Research in Cincinnati. "It does seem like we are stair-stepping higher but not quickly getting anywhere."
Major indexes waffled through the day, with health care the strongest among S&P sectors and utilities the weakest.
Bank stocks were flat after President Obama, saying "We want our money back," announced a tax that would amount to $90 billion over 10 years against banks that received federal bailout funds.
Detrick said technical levels were playing a significant role in trading, with 1,150 a barrier for the broad-based S&P.
"There's so much apprehension on the economy," he said. "Earnings season is very important. Are we indeed turning around? Are corporations making money and not just on cost cuts?"
Ahead of its earnings report after the closing bell, Intel was among the top Dow gainers as investors hoped the company would beat profit expectations of 30 cents a share. IBM and Merck also showed strength.
Disney and Verizon were weak spots on the bluechip index.
Equities showed little reaction to a surprisingly robust auction of $13 billion in 30-year bonds, but the Treasury market soared.
Tyson Foods was among the standouts on the S&P, rising more than 4 percent on an upgrade to "outperform" from Credit Suisse, which said the stock should benefit from a cyclical uptrend in the poultry industry.
With Wall Street focused squarely on employment and the consumer, government reports showing that 444,000 jobless claims were filed last week, while sales at US retailers fell 0.3 percent also put a damper on the steady rise in the markets. The Congressional Budget Office followed up the report by saying the US jobless rate is likely to stay above 8 percent until at least 2012.
The market was unsure what to make of the economic reports, but analysts mostly took a fairly upbeat view of the jobs print as still indicative of a recovery trend.
"The fact the claims rebounded only slightly following large declines in mid-December suggests that the recent improvement was real and not a result of measurement error," Nomura Securities economist Zach Pandl wrote in a research note. "We anticipate a further gradual decline in initial claims throughout the remainder of the month."
Health-care stocks were another bright spot as President Obama and Democratic leaders announced late Wednesday that they made "significant progress" towards a final agreement on a health reform bill. The Democrats are trying to work out the differences between the House and Senate versions of the bill.
Elsewhere in technology, software giant Oracle shares gained nicely after Morgan Stanley added the company to its "best ideas" list.
Target also was higher on an announcement that the big-box retailer will resume open-market purchases under its $10 billion stock buy-back program.
And PPG Industries rose after Citigroup raised the company to a "buy" based on a belief the coatings and chemical maker will benefit from increased auto sales.
In other economic news, RealtyTrac reports that foreclosures shattered prior records in 2009 with 2.8 million notices, and the record is expected to be broken again this year.
The dollar lost its earlier gains, while Treasurys added to positive numbers ahead of its auction of $13 billion in 30-year bonds later today.
Volume again was light, with 360 million shares changing hands in the first three hours of trading on the New York Stock Exchange. Breadth was slightly positive, with gainers narrowly edging losers.